POST REFERENDUM ANALYSIS: Why the West badly needs a one-eyed negotiator to engage with the Greeks.

Two cheers for democracy: the OXIs stormed to victory. But Greece is isolated and chock full of Fifth Columnists, and the creditors are multiply divided. The Slog discusses the options and argues that, without a bold step from the EU now, everyone involved in this mess will have only tears for souvenirs at the end of it. Is the resignation of Yanis Varoufakis the preface to this?

I’m thrilled that the Greek people stepped up to the Referendum plate. But in the cold light of a Monday dawn, all of us who want a free, varietal and democratic Europe must ask ourselves, “Has anything changed?”

I doubt very much if it has.The likes of Draghi, Schäuble, Dijesslbleom and Juncker have shown over and over again the disdain they have for Citizen Democracy. At every point in the last twenty years when member States have rejected neoliberal proposals, the European Commission has simply parked them, and put the result down to ‘a mistake’ by the People. It’s the way of the world today: when the UK Parliament threw out David Cameron’s proposal to bomb the crap out of hugely dispersed Islamist radicals, his reaction was not to reconsider: he hauled the Party Whips into his office and demanded to know why they had failed to deliver the vote he wanted.

What the élites lack today is the ability to reflect. They see only a risibly chosen goal, and a self-inflicted deadline before which they must reach it. Concern about whether the destination is Los Angeles or Auschwitz remains absent.

Juncker, Dijesslbleom and Draghi in particular are too far beyond accountability. Merkel may hold an elective position, but she is firmly established as the Mutti in the Vaterland. Similarly, while thinking Germans regard Schäuble as something of a neolithic liability, the Bild-reading knuckle-draggers hail Wolfie as a hero.

The only thing any of them fear, in fact, is what the US State Department, Pentagon and Wall Street think. And at the moment, those American élites are nervous bordering on very unhappy. Fears of Greece mixing with ‘the wrong sort of people’ are strong enough to override any half-baked claptrap about neoliberal eonomics: the dwindling contacts I still enjoy in the Land of the Free tell me consistently that Russian trade deals, and Chinese investments in – or bailout funds for – Greece represent major nightmares among Washington’s wonks.

The Americans are already dismayed and angry about the AIIB’s rapid success in recruiting developed World exchequers. The Ukraine adventure has been a disaster. The growing idea of a PetroRouble fills Wall Street with horror. And perhaps above all, the thought of losing Mediterranean Europe to Russian ports and non-euro currencies is abhorrent to those three generations of US diplomats who, since 1945, have endeavoured consistently to ensure that Europe is their creature…with a Dolleuro to seal the deal if necessary.

My hunch this morning is that the eurogroupe clowns will continue to stonewall, apply illegal pressure to the ordinary Greek populace, and perhaps even pose in public media as a reasonable bunch of chaps waiting for a ‘reasonable’ Greek proposal. But left to themselves, when something is proposed, they will give out with the usual “interesting but it doesn’t go far enough” crap designed to load yet more homework onto the Greek government.

Given that this is what they’ve done since February 2Oth, what is there in this democratic mandate for Syriza that might make Troika2 change tack? Resistance contagion remains the key thing the EU want to stop. They will not be able to do so, but they don’t accept that.

Last night, the rumours did not augur well: BoG Governor Stournaras seems to be the favourite PM candidate for those who wish to effect régime change in favour of technocratic government. Some were saying earlier in the day that if there was a YES majority, Syriza would resign and then Stournaras would be helicoptered in without an election. Others felt this was more likely in the event of a NO victory.

Dutch hairdresser and failed Gouda transplant Jerry Drivelbloke last night said, “I take note of the outcome of the Greek referendum. This result is very regrettable for the future of Greece.” So no glimmer of light there. The so-called professional analysts are still saying that Grexit is inevitable, and prior to resigning, Varoufakis continued to assert that it is impossible. But Frances Coppola explained, in a masterly piece last Saturday, how de jure Grexit could be forced upon the Greeks by more ECB financial bullying.

Draghi’s the name, and breaking the law’s his game. In fact, this may be the point at which we finally discover which side Dragula is on….if any. I have an instinct that, mad though the State Department is these days, the US élites will have an attack of the vapours if the eurogroupies start metaphorically bombing the Greek banks. Not only will Wall Street be near-catatonic with fear about that option, State will see it as an invitation for Putin to step in…and Fifi Lagarde will rightly point out that, while the ECB can take any hit with impunity, the IMF can’t.

This is where the geopolitics get very messy indeed. Putin can offer some help (in return for bases) but he’s not exactly flush at the moment: Saudi-American oil price manipulation has seen to that. And Vlad the Lad may well shrink, in the post-Ukraine environment, from winding up the White House any further. We will, I’m sure, get lots of bluster from the Russian leader…but not much in the way of hard cash. (Lest we forget, Russia’s finance minister said last week that Russia had not offered Greece the chance to become a member of the New Development Bank that is being created by the BRICS group.)

The Chinese are potentially a much bigger threat to American hegemony, but the last three weeks have shown that they’re somewhat distracted by a stock market heading for the sewer. So far, Beijing has remained politely detached about the Greek standoff, but there may be a clue in Deputy Chinese Foreign Minister Cheng Guoping’s statement to journalists last night, following the OXI victory, “I believe the Greek economy will turn round, and the economic crisis will be appropriately handled. Whether or not it can be appropriately handled will not only have an important impact on Greece and its people, but will have an important impact on the world too”.

So then – no hectoring or lecturing, generally positive…but a slight hint at the end that US buccaneering would have potential ramifications. The truth is, China has a massive export demand shortfall at present, and needs an unstable EU like Evangelos Venizelos needs to put on a few more kilos.

In short, a Syriza-led Greece may well find itself isolated, broke and eased out of the eurozone in fairly short order; and that prospect won’t be helped by the number of ruthlessly pro-EU corporacats plotting against the Administration…from the BoG via the media all the way through to the murkier parts of the Civil Service.

Last week, I understand there was a flurry of extended phone calls between Barack Obama and Angela Merkel. Things have moved on a long way from Geithner’s bold (and hotly denied) 2010 plan to encourage amputation of Greece by the EU….following which Israel and Greece would work for Wallington Street together on the exploitation of undersea rare metals and energy in Greek waters. Merkel’s learning from that episode was that she’d rather chew glass than leave the Greeks free to bargain outside the EU – although her ‘finance’ minister Wolfgang Strangelove holds the opposite view.

Thus I’m led inexorably to the conclusion that the two leaders (who have worked well together before) share a desire to avoid further complications and resolve the issue in a way acceptable to both sides. Similarly, Mutti has phoned Tsipras direct when the occasion demanded it, and has of late been distancing herself from Schäuble and Dijesslbleom. Finally, like most of us, she still distrusts Mario Draghi.

I’ve been posting for two months now about the obvious fissures in Troika2’s United Front when dealing with Athens. The ECB, the EC, the Eurogroupe, the IMF, Berlin, Frankfurt, Germany and France are all to one extent or another at odds with each other in a bewildering 3D game of noughts and crosses. Mainly, what we’re seeing is the standard outcome in all authoritarian States from Imperial Rome and Stalin’s USSR via Nazi Germany to Maoist China: the power-mad in a frenzy of power-grabs.

Only two people in Europe are above this: Merkel and Draghi. The unaccountable Draghi has the upper hand at the moment – ultimately he alone can control how much currency all the ezone States do or don’t get – but whatever his motives are, or his ideal end game might be, one thing Supermario is not going to do is take on the US.

In the kingdom of the Blind, the one-eyed Man is king. Except in this case, it’s a woman. There’s an emergency eurozone Summit tomorrow (Tuesday) night; before which Frau Doktor Merkel will meet with Francois Hollande to mark his card. Yanis Varoufakis was saying he expected negotiations to resume between Athens and ‘the creditors’ immediately, but that was purely for effect: with no deal on the table from either side there’s nothing to talk about….and nobody will do any talking of substance until Wednesday at the earliest. And of course, Yanis himself has now gone: it’s hard to see that as anything other than mutual sacrifices prior to a deal….will Drivelbloke be the next for the chop?

Syriza must of course continue the illusion of being responsible people trying to be flexible and go through the proper channels. But there is a reality behind the facade: it being far too early yet for Greece to throw in its lot with BRICS (so far, there’s been no invite from that quarter anyway) a strapped Russia or distracted China, there is only one way for the impasse to be removed: Obama needs to kick Draghi’s arse, while Merkel needs to sit on Wolfgang and tell Drivelbloke to STF up – or else. Then Geli needs to go back to the square she was on six weeks ago, and hammer out a face-saving deal direct with Tsipras.

It wouldn’t be the first time she’d taken charge, there are political risks for her in this course of action, it would really represent more can-kicking, and none of it will make a jot of difference in the end: resistance contagion is out of the laboratory and spells the end of the euro. But Angela Merkel will always be a big-canvas thinker. The next ‘final answer lies, primarily, with her.

50 thoughts on “POST REFERENDUM ANALYSIS: Why the West badly needs a one-eyed negotiator to engage with the Greeks.”

The Bank of England finances about half of the UK’s unfinanceable PSBR by buying gilts with electronically created money and dumping them on its own balance sheet. The Greek central bank should use this ruse to refinance its own banks. Carney is an expert in dodgy central banking.

In another extraordinary development the Greek finance minister has just announced his resignation.

In a move likely to spark further concerns about the role of other European leaders in Greece’s internal politics, Varoufakis said he was made aware of a preference by “some European participants” of his absence throughout the continuing negotiations.

The post was made on Varoufakis’ blog and there is nothing to suggest it is not authentic. It has also been cross-posted on his Twitter account.

Here’s the post in full:

The referendum of 5th July will stay in history as a unique moment when a small European nation rose up against debt-bondage.

Like all struggles for democratic rights, so too this historic rejection of the Eurogroup’s 25th June ultimatum comes with a large price tag attached. It is, therefore, essential that the great capital bestowed upon our government by the splendid NO vote be invested immediately into a YES to a proper resolution – to an agreement that involves debt restructuring, less austerity, redistribution in favour of the needy, and real reforms.

Soon after the announcement of the referendum results, I was made aware of a certain preference by some Eurogroup participants, and assorted ‘partners’, for my… ‘absence’ from its meetings; an idea that the Prime Minister judged to be potentially helpful to him in reaching an agreement. For this reason I am leaving the Ministry of Finance today.

I consider it my duty to help Alexis Tsipras exploit, as he sees fit, the capital that the Greek people granted us through yesterday’s referendum.

And I shall wear the creditors’ loathing with pride.

We of the Left know how to act collectively with no care for the privileges of office. I shall support fully Prime Minister Tsipras, the new Minister of Finance, and our government.

The superhuman effort to honour the brave people of Greece, and the famous OXI (NO) that they granted to democrats the world over, is just beginning.”

Methinks somebody, somewhere was threatened with their life. But that’s just me I don’t put politics in very high esteem.

Focusing on the Greece problem and “who is to blame” distracts from the underlying predicament that the world is running out of the cheap resources that an industrial economy needs to grow at a rate suitable enough that we can continue to pretend that the debts incurred during said growth can ever be paid back.
No modern major industry exists without subsidies. Energy production is subsidised. Food production is subsidised. Transport is subsidised. We have borrowed heavily from the future, assuming the future would be a richer place. But by our own actions the future is getting poorer by the second.
I’m sometimes accused of wanting to force people back to the stone age – this is ridiculous; we are effectively doing exactly that just by continuing business as usual; I actually want people to take stock, to realise that adding the words “green” and “sustainable” to the word “growth” does not trump the laws of thermodynamics, that a low-tech future is not necessarily a worse future. Greece is coming to us all, sooner or later. What will emerge from the other side – stone age or something better – will depend on how well prepare now. Making systems more resilient, increasing system redundancy to minimise losses due to failures, preparing low-tech alternatives for a temporary or permanent substitution. Focus on minimising losses rather than maximising gains. Use the lessons Greece is providing now to minimise the impacts on us when it’s our turn.

Great move by Yanis,i puts more pressure on creditors if they can’t deal with the new man/woman ii probably Tsipras himself but that doesn’t stop the creditors trying to undermine him,but with Yanis in the wings to take over it reduces that threat iii he will still be available on a personal level to advise & express his own views to the public(whether that will enhance his reputation is another matter)

By resigning, Yanis Varoufakis demonstrates that the Greeks understand synergy – which of course, having invented the idea, they do. Through his public acknowledgement that the will of the Greek people is greater than any one political personality, he neatly finesses the ego swinging contest which the ‘negotiations’ have become, and thereby maintains the momentum towards a just and workable solution to (not just) Greece’s problems created by yesterday’s historic vote. The EC and the ECB can throw as many toys out of the pram as they like but it will not alter the fact that their bluff has been comprehensively called and the game has to change. If the Greeks continue to show that they are all Spartacus, they will, in the end, win the day and help dilute the spell which we are all living under.

On the one hand, Varoufakis is now free to go talk to the French, Italians, Spanish, Portugese, Irish -and maybe even UK.
That might be more useful than be gagged in the palatial meeting rooms of the Troika.

On the other, Greece was in a position to keep the initiative; no-one in the Troika knows what to do (or get agreement to act with one voice), so Greece could just continue to set the terms and set the agenda; they have the people behind them of course; what validity has the Troika? You would have thought Yanis would have been of major use in there.

But maybe Tspiras can do that himself. He just has to remember not to wait for Europe. They would very much like to run the clock as slow as possible, after all it is Greece that has no money in the bank this morning.
So, nationalise the Banks and create an internal IOU system for non-cash money. Do not steal depositors’ savings.

+1 Dear HB! :)
At the moment I am unable to even attempt to sketch an outline of the current state of affairs – so flooded I am with thoughts and sentiments.
However, during the past week it has been impossible not to observe quite a few positive and negative internal developments that may be of some significance for the next steps. I may be able to come up with a coherent comment of some sort in the near future.
All the best!

PS: I do seem to be able to (faintly) hear the Fat Lady warming up her vocal chords.

+1 Hieronimusb I also think that now he is out the loop he can embarrass the creditors negotiators by telling what has happened at these meetings,so undermining their position or even forcing them to find new negotiators themselves & starting from a totally fresh perspective?

Totally agree. +1
The existing paradigms are broken and based on a toxic mixture of neoliberal crony capitalism and cold war game theoretic paranoia.
Unless you truly understand how these people think you can’t critique their approach and this is why politics at the moment is bereft of any real characters who could make a change for the better.

Sadly from my social experience, people are far too attached to their current trajectories to realise that they lead over a cliff.

Mr S reckons this a game changer: One of the big 4 central banks in the world is now in a bind.
The stock markets are built on sh1te.
What’s ahead? A murky crystal ball.

A low tech future? for the surviving serfs, certainly, if BIG Money gets its way.

I’ve been reviewing the 2014 Heartland videos, & many of the top climate change sceptics are now fully aware of the One World Govt aims behind the “Green” agenda. One, at least, I know is aware of the depopulation agenda, Lord Monckton.

I agree entirely. I have never understood how otherwise intelligent people have been sold on a system that requires continual growth on a finite planet. Perhaps too few take Physics nowadays. I had a discussion with a neoliberal a couple of weeks ago, and when I tried to point out the absurdity of linking ‘growth’ to the well-being of a population – i.e. the rate at which the Earth’s limited resources are consumed being used as a measure of the success of the system – he actually argued that ever increasing choice was another form of growth that was sustainable. I think that the wholly undeserved status of the psuedoscience of economics, the ascendancy of the accountant and the proliferation of ‘business’ graduates has perpetuated the madness inherent in the ‘growth is good’ mantra. They are all inculcated in a sect that refuses to acknowlege basic realities if these realities conflict with the greed of TPTB. Whether it is private energy companies that make profits on increased use of energy, or privatised prisons whose business models are predicated one keeping their prisons fully occupied, the lunacy of conventional ‘business’ and ‘economics’ does so much damage to our planet that our descendants (if they exist) will rate them as a collective delusion comparable to the Easter Island statue obsession.

wow JW another excellent analysis on a red letter day. all i want to add is hooray! the bottle we are in is not capped. the lid is off thanks to the brave greeks and we all share all the options now. we must all be brave and refuse to bow to threats or accept bribes..

A lotech future would employ more people, get us back to manageable community sizes and restore the balance between money and society.

I very much agree with that statement JW. (In fact, I have put my money where my mouth is and recently acquired another Phelon & Moore motorcycle, made in 1931. I repatriated it from la belle France where it had been living since 1937..) High tech is usually high dreck.

Could we not have a Facebook page dedicated to reinstating the awesome Yanis?
Despite our political differences I will deeply miss his smouldering goid looks round the negotiating table.
All the others are just sexual losers !

Great ananlysis, great comments. Germany thinks Europe can do without Greece? What would Europe really look like without Greece and all those influences that came from Greece and which it now takes for granted? I have a suggestion. If Monsanto can copyright Basmati rice, and Indian product, why can’t the Greeks copyright certain ideas that are certainly the product of Greek minds and definitely belong to their heritage? I am thinking of such things as pi, without which most mathematics and physics would be impossible, and the Hippocatic oath, to give two examples (there are many others). If copyrighted, users would have to pay a fee. Take pi . Even at one euro cent per use, it would add up. We could pay off our debts as well as provide an economically and ecologically decent future for our citizens. Does anyone know a way to propose this to the Greek govrnment?

One of the reasons for Varoufakis’s resignation was reportedly an acute conflict with Jeroen Dijsselbloem, president of the Eurogroup, which includes all the finance ministers of countries in the Eurozone.

‘I have never understood how otherwise intelligent people have been sold on a system that requires continual growth on a finite planet.’
In one word, Greed. It’s the ‘I want it now’ culture and f*ck the future, I won’t be her so I don’t care.

Doesn’t seem like the sky has fallen in, the DAX is down less than 1%, nothing really out of the ordinary about that. FOOTSIE is similar, only the CAC 40 is own more at 1.4%.
They are not earth shattering numbers by anybody’s book.

I am betting Golden Dawn has it right and Varafoukas was let go so Tsiparis and Merkel can hammer out a deal. Merel will tell wolfie to shut up and obama and the trilateral boys will give the same orders to Draghi .junker and djissle bum will fall in line. One thing is for sure The leftists in Greece do not want to leave the Euro any more than the New democracy boys. Hence Samaris has now ” resigned also. I think the stage is set for some kind of deal

What has changed?
Everything.
Tsipras now has the mandate he needed to be able to tell, in good faith, the Troika to eff off, and start discussions with other trading blocks.

And Varoufakis has pulled another absolute master stroke, he can no longer be used as an “objection” and he’s free to advise in an unofficial capacity if he is called upon, and advise not just the Greeks but other nations as well.

I highly doubt that anybody has threatened him, the horse has already bolted for anybody to be so stupid as to do that.

The near term future is still bleak for the Greeks but the light at the end of the tunnel does not now have to be an oncoming train.

Regarding the legality of the referendum, or not, it is completely irrelevant and just another red herring.

The government was already entitled to rebuff the Troika, because, you know, it’s the government. The referendum was just about getting a mandate and support from the people for what the government believed was an important issue.

It’s got sweet fa to do with the EU, whether or not the offer was still on the table, which it wasn’t. It’s laughable, who are these people?

Valdis Dombrovskis, the Latvian-born EU vice president responsible for the euro, said the vote had “complicated” the work of the creditors and had left the Greek government in a weaker, not stronger, negotiating position.
A write-down of Greece’s €380 billion (£270 billion) debt mountain is now “off the table”, he said.
So, the referendum was all a silly distraction and you Greek plebs had better get back in line.
If a revealing and horrific picture of what the European Union is, this is it.

Nice thoughts Rowan however I’m sticking with the five tried and true methods humanity has used in the past when a change of direction became a necessity. They are war, disease, famine, pestilence and death. If they fail to right the ship then a mass extinction certainly will. Almost everything that has had life on this earth is now extinct so this will be unavoidable at some point. So throw that two year old smart phone in the land fill and get the latest one on the market. Blaise Pascal had it right when he said

“All men’s miseries derive from not being able to sit in a quiet room alone”.

I don’t think it’s greed, I think it’s human nature. And that is why the predicament is such a predicament – humans need a external controls (just like any other species) to prevent overshoot getting out of hand – and we don’t like limits, we tend to innovate around them without thinking of the consequences.
An example – the natural control to famine is population movement, increased deaths and decreased births. The population in the affected area is reduced, the food supply regenerates and “balance “is restored. The human response to famine is to send food donations, thus reducing population movement, decreasing deaths and increasing births – precisely the opposite of what is needed if food supply in the affected region is to have a hope of recovering.
Another example – humans have been selectively breeding plants and animals for thousands of years, so much so that we are now heavily reliant on a few, not very genetically diverse, species for most of our calorie needs. These species may be the most productive available, allowing a much larger population to be fed than on their wild counterparts, but are increasingly vulnerable to pests and diseases (and climate change, of course). The human solution? Genetic modification, to try to prevent the bugs and disease. Precisely the opposite of what is needed, which is a greater variety of calorie sources, and greater genetic variety in the ones we already exploit. Shame we’ve extinctified so many species already…
Another? Sure! Humans first produced oil in useable quantities by literally sticking a pipe in the ground – out gushed the oil, hundreds of barrels of oil for every one needed to produce, transport and refine the stuff. Nowadays, new fields have to be fracked and extensively drilled and pumped to extract a little dribble of oil (comparatively speaking), using up far more energy than the old “pipe in the ground” technique. The human response? To start turning Alberta into a giant sandy oil pit and pretend what comes out is oil; to call the liquid gas (condensate) that comes out of gas wells “oil” and pretend it’s the same as real oil; all while loudly denying that oil production could ever peak and decline.

Humans seem to find living in reality to be depressing. No-one really needs “selling” on the idea that limitless growth is possible because that’s what we all *want* to believe; we sell *ourselves* on the idea. From Cassandra to Malthus to the Club of Rome – and many more in between – those who try to warn of the dangers are ignored, laughed at, denigrated and belittled (and surprisingly often murdered) by those who do not want to remove their happy goggles and face reality.

I’m getting a bit long, so I’ll keep this brief. There seems very little awareness that the situation in Greece is coming to us all – lots of fingers are pointed and lots of blame is cast, but no lessons are being taken to heart. At least publically; for all I know people are “collapsing now to avoid the rush”, secretly and quietly, in their thousands. But somehow, the exponential rise in soup kitchens and the ever increasing number of workers unable to survive on their salary tells me that no lessons are being learned.
Don’t wait for the politicians. Do what you can, yourself, right now, to make your community more robust and more able to tolerate shocks to the system. Yes, this might mean spending your money on other people, even strangers. Yes, this might mean giving up your holiday home so that locals can stay in their home area, or sharing your home with others who are in desperate need. Yes, what you do will probably entail sacrifice of some kind. But you’re going to lose it all anyway, sooner or later. Just look at Greece.

I was as jubilant as everyone on this blog when the size of the NO vote came in.

Now I’m asking myself what has really changed for the better?

If anything the Greeks are the ones running around trying to get a deal. It seems the EU-ECB are in no rush to talk to the Greeks, knowing full well the money’s running out in the Greek banks. Of course, when it does run out there’s a good chance of real trouble on the streets. Just what the doctor ordered for regime change.

Sorry, but I’m not feeling at all like some great victory over the bankers has been won. Quite the opposite in fact. I so hope that I’m wrong.